Revival of the waqf-based takaful model in Malaysia: issues and the way forward

Abstract

This study finds that the waqf-based takaful model ought to be implemented in Malaysia to eliminate some issues related to the current practice of tabarru (donation), wakālah (agency), and mudārabah (profit-and-loss sharing) within the takaful system. There are, however, legal issues, related to waqf-based takaful that should be solved through a proper and comprehensive waqf (endowment) act by the authority. Otherwise, a subsidiary of the State Islamic Religious Council may act as a takaful operator providing waqf-based takaful services. Above all, the takaful operator is required to establish a Sharīah-compliant mechanism for managing the fund while strictly avoiding the risk of losing the capital of the waqf fund and providing the takaful services as needed by the participants. Nevertheless, some constraints and challenges for the implementation of the waqf model in Malaysia may remain, and such constraints should be addressed by all parties involved in order to make this takaful model a reality in Malaysia.